Business 15 April 2019

Steve Kaaru

Hedge fund Polychain Capital assets shrink by 40% in Q4 2018

The crypto winter last year hit the industry hard, and Polychain Capital knows this all too well. The San Francisco-based hedge fund’s assets under management lost 40% of their value in the last quarter of 2018.

According to a report by the Wall Street Journal, the firm’s assets stood just shy of the $1 billion mark in August. This was despite the market having taken quite a hit in the first eight months of the year. However, in the last quarter, the firm lost $376 million to stand at $591 million according to a recent SEC filing.

According to sources cited by the WSJ, the decline was as a result of a drop in value of the firm’s crypto holdings. Some of the crypto tokens the firm holds were the worst hit by the bear market.

Nevertheless, the firm has held its own, the sources told the publication. While the 40% dip was quite huge, it was still not as bad as the entire crypto market over the same time. The market purportedly lost over 70% of its value.

Despite the drop, Polychain remains one of the most formidable crypto hedge funds globally. It was founded in 2016 by former Coinbase employee, Olaf Carlson-Wee. Over that time, it has invested in a diverse set of companies. They include stablecoin MakerDAO, messaging platform Kik, cloud computing project DFINITY, privacy focused blockchain project Republic Protocol and digital payments platform Celo.

It currently manages five funds, the filing revealed. These are Dfinity Ecosystem Fund, Polychain Master Fund I, Polychain Opportunities Fund, Polychain Ventures and Polychain Master Fund II.

The company concluded by highlighting the unpredictability that investing in cryptos brings with it. It stated:

“There is no assurance that digital assets will maintain their long-term value in terms of purchasing power in the future, or that acceptance of digital asset payments by mainstream retail merchants and commercial businesses will grow.”

Despite the crypto winter in the last year, crypto hedge funds have remained unfazed. They have continued to invest in crypto and blockchain startups.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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